Every investor wants their stocks to pay off – or they wouldn’t be in the markets. But finding the right investment, the one that will bring high returns, can sometimes be difficult. A wise investor will apply a few basic rules and common sense and stick to them.
One of the basic rules of investing is “buy low, sell high.” This will naturally lead us to the low cost small cap side of the stock market. While the big names make the headlines, small cap stocks offer the highest returns.
With this in mind, we have used the TipRanks Database search for three values corresponding to a profile; a market cap of less than $ 700 million and a stock price of less than $ 10. Best of all, these small-cap tickers have strong buy consensus ratings from the analyst community and exhibit strong upside potential – from 80%.
Gaming enthusiasts holdings (EGLX)
We’re going to start with a company that’s not really new to gamers, although it’s new to NASDAQ. Enthusiast Gaming, based in Toronto, Canada, is one of the leading digital media in the online video game world. The company owns and operates dozens of online gaming brands, including forays into journalism, social media, community chats, and live gaming. The numbers are huge – the company’s esports brands have over 100 million franchise fans, while the “experiential” segment of Enthusiast Gaming, the annual live show, has seen over 200 exhibitors, 30,000 attendees and 5.6 million viewers online at last year’s event.
All of this generates a lot of buzz, and Enthusiast Gaming mounted that buzz directly on the NASDAQ index last April. The move from the OTC exchange to the big board saw the EGLX ticker start trading on April 21.
The company has grown rapidly, reflecting the popularity of electronic sports and online video games. For the first quarter of 2021, EGLX reported sales of C $ 30 million (US $ 24.4 million), up 321% from the previous year quarter. Gross profit was C $ 5.9 million (US $ 4.8 million), an 80% year-over-year increase.
In detail, Enthusiast Gaming reported a total of 137,000 paying subscribers at the end of 1Q21, indicating 12-month growth of 49%. The company’s direct advertising sales have grown from C $ 60,000 a year ago to C $ 2.2 million (US $ 1.79 million) in the current report. And to an extent that bodes well for the future, Enthusiast Gaming has reported 9.9 billion total views of its written and video content online.
Additionally, on June 24, the company completed the acquisition of online game data tracking company Tabwire, owner of TabStats. The deal was worth $ 11 million, paid for in cash and stock, and brings to Enthusiast two main assets of Tabwire: its proprietary technology and its player database, totaling 13 million profiles.
Enthousiast Game Coverage for HC Wainwright, 5 Star Analyst Scott Buck sees a clear path forward for the continued growth of the business.
“The company-owned and operated digital media platform includes over 100 gaming-related websites and over 1,000 YouTube channels. This large portfolio of digital properties is paired with game and live event content, creating a flywheel in which the company can monetize its digital assets. As monetization improves, revenue growth and gross margin expansion should serve as an important catalyst in attracting new investors, ”Buck said.
The analyst added, “While the COVID-19 pandemic has likely accelerated the growth of the game in 2020, we believe there is a secular growth base that is expected to continue for several years.”
To that end, Buck is pricing EGLX a Buy and his $ 10 price target suggests an 80% year-over-year increase. (To look at Buck’s track record, Click here)
Buck’s bullish position on EGLX is hardly an outlier; in fact, the Wall Street consensus is slightly more bullish. There are 3 recent purchase notices on file, which makes the purchase consensus rating very unanimous. The shares are trading at $ 5.55 and the average price target of $ 10.45 indicates a potential rise of around 88% for the next 12 months. (See EGLX stock analysis on TipRanks)
Mogo Financial Technology (MOGO)
Let’s change gears, let’s look at a fintech stock. Mogo is a small-cap Canadian financial company, based in Vancouver, British Columbia, that offers a range of services to its clients, including personal loans, prepaid Visa cards, credit score viewing, credit protection identity fraud and even mortgage services. The company bypasses the traditional banking system, basing its services on-line and favoring direct contact with its customers. This clientele is vast; Mogo has over 1.6 million registered members.
This business is still feeling the effects of the economic dislocation that hit during the COVID crisis. Revenues for the first quarter of 2021, at C $ 11.4 million (US $ 9.28 million), were down 17% year-on-year, although they were up 14% sequentially. In a benchmark that may be larger than total revenue, the company recorded the second consecutive quarter of sequential growth in subscription and service revenue, which was up 32% from the fourth quarter, reaching C $ 6 million (US $ 4.88 million).
Although still small, Mogo is growing and has reported two important news in the past two months. In June, the company completed the acquisition of more shares in Coinsquare, Canada’s largest crypto platform. The recent move, which allowed Mogo to acquire 2% more of Coinsquare, brings its total stake in the crypto platform to 37%. Mogo kept its license to acquire up to 48% of Coinsquare.
Earlier in May, Mogo announced that it had received “Visa Ready” certification for Carta Worldwide, its wholly-owned payments platform. The certification allows Carta to expand its reach in North America and Europe, with access to Visa’s partner network.
Among the fans is analyst BTIG Marc Palmer who rates MOGO shares a purchase with a target price of $ 13. This figure indicates a margin of appreciation for the stock of about 84% from the current price of $ 7.08. (To look at Palmer’s record, Click here)
“We believe that MOGO offers an attractive means through which investors can play both on the digital disruption of the Canadian financial services industry and the growing adoption of bitcoin and other cryptocurrencies. The company’s current valuation does not significantly reflect the value of its investment in Coinsquare even though that stake is worth at least $ 5 per share, in our opinion, ”noted Palmer.
Overall, Mogo has a lot of love for Wall Street; the consensual strong buy rating of the share is supported by 5 unanimous opinions. The average price target of $ 12.80 implies an increase of approximately 81% from current levels. (See the analysis of MOGO shares on TipRanks)
Avrobio, Inc. (AVRO)
Finally, Avrobio, a clinical-stage biopharmaceutical company, aims to create single-dose gene therapy treatments for painful, debilitating chronic diseases. Avrobio is working on treatments that will limit or stop disease progression in lysosomal disorders, by inserting a therapeutic gene directly into the patient’s stem cells – and letting normal metabolic processes spread the gene throughout the body.
Avrobio’s pipeline has passed the preclinical stage and entered phase 1 and phase 2 trials. The company has 5 gene therapy agents in development. The main candidates are AVR-RD-01, a new treatment for Fabry disease, and AVR-RD-02, a gene therapy for Gaucher disease.
Regarding AVR-RD-01, following the completion of the Phase 1 trial, the company had discussions with the FDA on the regulatory path to be followed and the structure to be used for the registration trial. Phase 1 included 5 patients receiving AVR-RD-01, and the first results demonstrated high efficacy, acceptable safety and good durability. Going forward, the Phase 2 FAB-GT trial now has seven patients treated, and recruitment continues in the United States, Canada and Australia. The company plans to enroll up to 14 patients in this trial.
AVR-RD-02, the investigational gene therapy for Gaucher disease, is currently in a Phase 1/2 safety and efficacy study. The study focuses on patients with type 1 Gaucher. Recruitment has started in Canada and Australia, and the company intends to recruit 8 to 16 patients for this trial. The first data, reported during the first trimester, showed that the plasma levels of chitotriosidase decreased by 49% and that the levels of the toxic metabolite lyso-Gb1 decreased by 44% in the first patient six months after gene therapy.
Needham’s analyst stands squarely in the bull camp Gil blum that AVRO rates a purchase with a target price of $ 28. Investors could pocket gains of 183%, if Blum’s forecast hits the mark in the next 12 months. (To see Blum’s record, Click here)
“AvroBio’s platform addresses the main challenges of current and emerging treatments improving tissue distribution (ie CNS) while maintaining long-term safety and activity. AvroBio has active clinical programs in 3 LSD (Fabry, Gaucher type 1 and Cystinosis) with a potential of over $ 2 billion in peak sales. We believe that the encouraging early clinical results of AvroBio, the company’s early focus on end-use product using the Plato platform, and the promise of LV gene therapy in LSD with CNS involvement distinguish the company of his peers, ”Blum wrote.
In total, there are 7 recent reviews on file for this biotech company, and they break down from 6 to 1 in favor of Buy over Hold, giving Avrobio its Strong Buy consensus rating. The shares are currently trading at $ 9.89 and have an average price target of $ 22.20; this implies a robust upside potential of ~ 124% for the next 12 months. (See the analysis of AVRO shares on TipRanks)
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Warning: The opinions expressed in this article are solely those of the analysts presented. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.